Magma’s outlook for FY 15-16 is upbeat despite tough environment

Hyderabad/Kolkata, May 2015: Amidst a tepid economic environment, stressed cash flows in the hands of its rural and semi-urban customers, and high interest rates, Magma Fincorp Ltd. continues to maintain a healthy growth trajectory in its business, revenue and profits, as reflected in the recently announced Q4 and FY15 consolidated financial results. Magma Fincorp Ltd. came out strongly during 2014-15 with PAT growth of 17% YoY. The company’s loan book as on 31st March 2015 stood at Rs 19,567 crore – up 9% YoY, which is above par compared to the industry. Business disbursals increased 11% to Rs 10,115 crores while annual revenue grew 13% to Rs 2385.98 crore. Infusion of new capital will take the CRAR to approx. 20%.

In line with Industry Best Practices and accepting our investors/lenders suggestion, Magma has inducted ICRA as the second rating agency to rate its Secured Bonds to begin with. ICRA rated Magma’s Secured Long Term debt at AA- with a positive outlook reflecting the positive changes underway at Magma. CARE too has revised its rating from AA to AA-.

Mr. Atul Bansal, Chief Financial Officer, Magma Fincorp Ltd. said, “Magma, factoring in the time for the Indian economy to recover fully has recast its strategy. Right from the markets we want to operate in to the customer segments therein and the products we offer have been reformulated with a view to drive up efficiencies, margins and profitability. Simultaneously, our credit underwriting has been changed to reflect external changing conditions which would enable us to build a more robust book and reduce delinquencies. Our collection process has been upgraded with technology with early warning systems established. By using both initial and early defaults to flag possible future credit losses early on, Magma would be in a position to take faster action to reduce delinquencies at an early stage. This approach of ours has been resoundingly endorsed by existing and new investors who have infused Rs .500 crores into the Company’s capital”.

KKR has increased its investment in Magma reinforcing the confidence of long-term investors in the company. While Mauritius-based LeapFrog Investments, one of the world’s largest impact investment funds, and India Value Fund Advisors, an investment fund dedicated on India, are new investors in the company, KKR is an existing investor.